How to Save Money

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The phrase “A penny saved is a penny earned” is more than just an overused cliche; in reality, it is sound advice. Some people are desperate to find ways to make more money, when in reality what they really need to do is learn how to save money. There are many ways to do this.

Record Your Spending

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One major reason people spend too much is because they have no idea how much they are spending, and what they are spending.

By keeping a record of your spendings you can identify where you are overspending and what you can cut. It may not be until you start writing it down that you actually realize how much you are spending on your daily coffee habit or shopping sprees.

Choose Something to Save For

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Having something to look forward gives you an incentive to save. Whether it is a vacation or a car,you can set your budget accordingly. Always having something special looming in the future will make saying no to that coffee much easier.

Consider both long term and short term goals. A reward too far in the future may seem too out of reach while a reward which is too small may not be enough of an incentive. It is important to create both to keep you on track.

Find Areas to Cut Back

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Evaluate your current bills and find areas you are spending money that can better be spent elsewhere. Cut back on services you don’t need or downgrade others. For example, do you really need premium cable, Hulu, and Netflix?

Also consider renegotiating your bills, particularly with companies that you have been a long time customer of. Sometimes a brief call to your phone company or internet provider letting them know you can no longer afford the service will result in a lower bill. They would rather offer you a lower rate for the same service than to risk losing a long time customer.

Create a Budget

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For many people, it is difficult to stick to a budget simply because they do not have a budget. It is important to set a budget prior to spending any of your paycheck. First, you must determine how you will set aside your money. This can be through an app with your bank or by simply separating the money into envelopes.

Start with bills such as rent, utilities, cell phone etc. and set the money aside for each of these separately. Then move onto gas and groceries and estimate your monthly spending for each, and set each aside. Then, based on what remains, determine an amount to allocate for savings.

Stick to Your Budget

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None of the money which you have set aside should be dipped into for anything aside from which you allocated it for. Now, whatever is remaining should be divided by four to give you your weekly spending money. Not only should you not dip into your other funds, but you also should not dip into spending money for future weeks.

So before deciding that you don’t have enough, maybe consider evaluating what you do have and where you can cut back. You may discover areas where you can save more money than you realize.